De-Registering a limited company that never did business

De-Registering a limited company that never did business

Dear GeoExpat

I'm looking for some advice. Two years ago I set up a company hoping to do business but I never ended up getting around to it and have now abandoned the idea, at least for the foreseeable future as it seems too difficult to be profitable at the moment.

The only costs to the business since incorporation have been the business registration fees and company secretarial / registered address costs.

I did not even open a corporate bank account as I had not yet started business and after reading how hard it was, thought I should at least have a good business plan to present to a bank. I have been paying for the company secretarial services / registered address service from my personal bank account.

I ended up just not doing anything with the business, and I did not file for dormancy as I didn't even know about it. I believe my company secretary filed NIL on returns.

I am the sole shareholder.

I've been reading that for de-registration, there will need to be an audit. How can I prepare an audit if I have not opened a company bank account?

I do not believe I even claimed the business registration fee as an expense in the last return.

Truthfully, I have a hope that I can start this business one day (I was hoping to start publishing English-language graphic novels) but that seems out of reach for now as I overestimated how hard it would be to be profitable.

Would the correct course be for de-registration, and if so, how would the audit happen without a bank account?

As another question, would it just be better to file the company as dormant? How long can a company remain dormant?

I will be living HK for the foreseeable future (permanent resident) but I don't know if I'd ever be able to start the business proper. I would like to keep the same company name if I ever did start, but I don't anticipate it being taken up by someone else anyway since it's just my surname which isn't common.

Even if your company is dormant you still have to pay the BR fees (approx 2k per year). You can skip the audit however if you have no profits I believe you can do the audit every 3 years. Although I'm not sure as I have never been down that route.

Given the BR fees, you might just consider to file a trademark to protect your company name:

Then deregister your company. Regardless you have to use an auditor to deregister so just contact them and let them deal with the paperwork.

You can use your company name later again if desired.

But on another note if you are using your surname, do you have an issue if someone used the name and you just used a variant? If so then just deregister the company and deal with everything later on when the time comes. Part of having a trademark also has some responsibility for monitoring the market that no one is illegally using your trademarked name.

With a limited company you must do an audit every year irrespective if you make a loss. The IRD may not request a Profits Tax submission but you must still complete an audit. Whether you have a company bank account is irrelevant when it comes to an audit. You have business expenses (business registration fees and company secretarial / registered address) so this would be included under the audit. In order to de-register you will need an audit done for every year since incorporation. The whole de-registration process will take about 3-6 months

Even if your company is dormant you still have to pay the BR fees (approx 2k per year). You can skip the audit however if you have no profits I believe you can do the audit every 3 years. Although I'm not sure as I have never been down that route.

Given the BR fees, you might just consider to file a trademark to protect your company name:

Then deregister your company. Regardless you have to use an auditor to deregister so just contact them and let them deal with the paperwork.

You can use your company name later again if desired.

But on another note if you are using your surname, do you have an issue if someone used the name and you just used a variant? If so then just deregister the company and deal with everything later on when the time comes. Part of having a trademark also has some responsibility for monitoring the market that no one is illegally using your trademarked name.

You can de-register yourself, it's easy enough, no need for an auditor to handle that part.

The audit should be very simple and quick, just send them the simple management accounts. They will tell you if you need anything else.

The Company needs to hold a general meeting or pass a written resolution in lieu of the meeting whereby the members agree to: (i) deregister the company and (ii) close the bank account.

Confirmation of no outstanding liabilities

The Company should have no outstanding liabilities before applying for deregistration.

The Inland Revenue Department needs to confirm if the company has any outstanding matters in terms of the settlement of government fees, filing of Profits Tax Return, Employers Return and audited financial statements.

You will need to present the application of deregistration of the Company before the Inland Revenue Department. If there is no pending matter with the Company, the Commissioner of Inland Revenue will issue a written notice of no objection to the Company being deregistered.

After that, the Companies Registry will publish for three months the name of the Company to be deregistered in the Gazette. During such period, third parties may oppose the deregistration.

After this period, the Company will receive a final notice from the Companies Registry confirming the deregistration.

Truthfully, I have a hope that I can start this business one day (I was hoping to start publishing English-language graphic novels) but that seems out of reach for now as I overestimated how hard it would be to be profitable.

Many thanks.

That business "concept" would thrive more in Japan where manga comics/animation is so notoriously popular than in HK. Sorry, just my thoughts.